Malaysian government forces MH to reverse turnaround plan

[Keith T 2]

Just saw this on a.net:

 

http://www.airliners.net/discussions/gener...d.main/2980439/

 

The official reason appears to be what the government perceives as 'social obligation' on the part of the national carrier.

 

Your thoughts?

Edited September 13, 2006 by Keith T

[KC Sim 2]

If the government's meddling in the running of Malaysia Airlines stops here, maybe the damage will not be too extensive.

 

But if the government now wants to also reverse MAS' decision to stop flying to specific international destinations . . . then it is back to the drawing boards for MAS. MAS would have paid off all those staff (who were made redundant) for nothing if their services are needed again.

 

Airlines should be run by technocrats who know the business . . . politicians should just stay with politicking in parliament. Let's hope that good sense prevail at the end of the day.

 

KC Sim

[Edwin P K 0]

I couldn't access the site now as I'm at work now.

 

Can some one summarise the issues??

[Vivek 0]

This looks like a classic case of too much government interference in the running of the airline. Pretty similar to what we have seen with Air India! Due to senseless meddling by the Govt of India in the running of AI, the quality has gone down and a lot of revenue has also been lost due to freebies handed out to ministers and beaureucrats.

 

The best solution for this is to privatise the airline

 

- Vivek

 

If the government's meddling in the running of Malaysia Airlines stops here, maybe the damage will not be too extensive.

KC Sim

 

[Sanjay Thaker 0]

i think the guy who started the forum in A.net has exaggerated by saying MH would be bankrupt due to this...and another thing, the increase of flights to penang and langkawi is not social obligations but rather due to a higher demand

[Keith T 2]

i think the guy who started the forum in A.net has exaggerated by saying MH would be bankrupt due to this...and another thing, the increase of flights to penang and langkawi is not social obligations but rather due to a higher demand

 

The Minister for Transport was quoted in the news article RE 'social obligation.' I suppose the powers to be are not very happy with AK's flight delays which cause pax connecting to MH flights to be late or miss their flights altogether. Some element of public pressure might also be involved, from my reading of the articles cited.

 

Anyway, if there's anyone here who can shed light on what's really going on, it'd be much appreciated as we're currently only given the "official" word on things.

[Guest Michael]

This is very sad coming from a person writing from Perth, I hope the Government has common sense over this and does let it prevail before doing anything harsh.

[Sanjay Thaker 0]

kinda surprised that Mr. Idris has not given a statement bout this yet..juz wondering...could it be possible that more people has experienced AK now and they feel that they rather fly with MH now that MH's domestic prices are tiered and more competitive? Could that be a reason for the govt to bow to the pressure by the public?

[Denny Yen 0]

MAS' Board of Directors approved the turnaround plan, and accordingly Jala proceeded to implement it. I wonder if the gov't has carefully considered what would major investors think and implications given that MAS is now ordered to U-turn on its plan. Take note of Jala's choice of words in interview below:

12-09-2006: MAS: Resumption of certain East M'sia flights will not affect turnaround plan

By Ashwin Raman & Isabelle Francis

 

Malaysian Airline System Bhd (MAS) believes the government’s call for the national carrier to resume certain domestic flights in East Malaysia will not hinder its business turnaround plan.

 

On Sept 9, the Ministry of Transport said MAS would have to resume the Miri-Kota Kinabalu (KK) and Kuching-Bintulu routes from Monday to overcome the shortage of flights experienced in East Malaysia after the rationalisation of domestic routes effective Aug 1.

 

These flights are now exclusively operated by AirAsia Bhd after the rationalisation of the domestic aviation sector, which also includes Fly Asian Xpress Sdn Bhd that covers the 22 rural turboprop flights.

 

As part of the national airline’s three-year business turnaround plan, MAS had initially reduced the number of domestic routes to 19 from 118 in an effort to return to profitability.

 

However, since the rationalisation was agreed upon, its managing director Idris Jala said MAS had resumed four routes flying between KL-Tawau, KL-Sandakan, Kuching-Johor Bahru and Penang-Langkawi.

 

MAS will also add flights on the Kuala-Lumpur-Labuan route by the end of the month.

 

“In our business turnaround plan, we have said that in addition to ensuring route profitability, we are also building out our network to ensure that we provide strong connectivity and this is definitely in line,” Idris said in a written reply to FinancialDaily.

 

An analyst report on Sept 11 said the call by the ministry would not make economic sense for MAS as the airline would be reinstating some flights that were probably making losses.

 

However, Idris said with its international load factors, it was confident that it would make the additional routes profitable aided by a strategic fare-pricing structure.

 

“All of these destinations are strong tourist attractions and this means that we will be able to provide our passengers connectivity and full interlining,” he said.

 

As for a potential price war between MAS and AirAsia, Idris said: “Our pricing structure would be in line with the micro-segmented fare that we introduced last month, with specific fare structures targeted at specific groups of travellers.”

 

Meanwhile, on increased competition between MAS and AirAsia in East Malaysia, AirAsia chief executive officer Datuk Tony Fernandes said both airlines were catering to different market segments.

 

“People who want to fly MAS would choose them, and people who want to fly us would choose us.

“We only had two exclusive routes — Kuching-Bintulu and KK-Miri — but they were small routes anyway,” he told FinancialDaily.

 

http://www.theedgedaily.com/cms/content.js...696c20-78a47621

[Sanjay Thaker 0]

could be fueled by increasing demand to fly on MH flights..something Mr. Idris tried to hint in that interview

Edited September 14, 2006 by Sanjay Thaker

[Edwin P K 0]

They think what? Pasar Malam business? I just can't believe this, after merely having the plan to take off in it's infancy stage...I mean this is a 3 year plan!